The Subject of Marine Insurance

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The Subject of Marine Insurance


The Subject of Marine Insurance

  1. What Can Be Insured

Generally, everything that will be exposed to risk of facing the perils of the sea will be subject to a contract of a contract of marine insurance. This can be seen in Section 3 MIA.

  1. What Is Covered By A Policy On A Ship

Usually in a marine policy the cover includes the hull of the ship and the machinery on board the ship. Apart from this the insertion of the words vessel is also a norm in filling out the marine policy standard form.

  1. Materials, Outfits And Others

Outfits are usually the stores and provisions on board a ship to be utilized by the crew of the voyage and as such outfits are usually covered by the marine insurance coverage (Hall v Patten). Having said that, in the initial years, certain industry outfits, like the whaling industry for example, on board a vessel will not fall within the coverage of a marine insurance coverage (Hoskins v Pickersgill). This was altered via rule 15 of the Rules of Construction within the MIA as this rule states that ordinary fittings of a particular trade are included for cover of a contract of marine insurance.

  1. Bunkers And Engine Stores

Based on rule 15 as mentioned above, the bunkers and engine stores are allowed under the policy. This rule is not followed in time charter as in those instances the coverage is not inclusive of the hull (Roddick v Indemnity Mutual Insurance Co).

  1. What Is Covered By A General Insurance On Goods Or Merchandise?

Good of a merchantable nature is included in the marine insurance policy cover. This most definitely does not include personal effects belonging to the crew, provisions and stores on board (rule 17 of Sch 1 MIA)

  1. The Policy Covers The Safety Of The Adventure

Since the case of Sanday & Co v Br & For Mar Ins Co it is implied that the insurance cover is also applicable to the adventure and not only to the good. This was later expounded upon in the case of Rickards v Forest Land Timber & Rhys et al wherein the House of Lords held that the policy includes a cover of the chattels and as well as the expected benefit of their arrival.

  1. Cargo Must Be Put On Board For A Purpose Of Commerce

Only merchandise are covered by a marine insurance policy. As decided in the case of Brown v Stapyleton, the goods carried about by the passengers in a ship or owned by individual passengers do not fall within the cover of a marine insurance cover policy. The exception to this when goods, such as personal belongings, are shipped as cargo (Ross v Thwaites).

  1. Goods On Deck Not Covered By A General Policy

Goods on deck are not covered by a general insurance on goods and merchandise because they are attached with greater risk compared to goods carried under deck (Blackett v Royal Exch Assurance Co).

  1. Does A Policy On Goods Cover Packing Materials?

Where the goods are travelling unprotected other than in a container, then the container will not be insured (Lysaght v Coleman). On the other hand, if the goods were carried as part of the container then the container will be covered (Brown v Fleming). This same principle was applied in the case of Berk v Style where 100 tonnes of kieselguhr was shipped in paper bags. It was held that the bags were insured.

  1. Freight And Loss Of Earnings / Loss Of Hire

Rule 16 Schedule 1 MIA provides for freight to be covered by a marine insurance policy. It is also well pondered by the Court in the Flint v Flemyng.

  1. Anticipated Freight

Expected freight is an established principle of marine insurance. This was seen within the judgment in the case of Lucena v Craufurd.

  1. Advance Freight, Contingent Freight And Insurance For Part Voyage

Section 12 MIA allows for insurance to be taken for advance freight given out by the charterer or his agent as an advance on part of the freight. Contingency freight policy can used to protect the cargo owner against any part loss suffered (Kung v Methuen).As seen in Taylor v Wilson, freight insurance on part voyage is allowed.

  1. What Is Covered By Insurance Of Freight?

Freight may be insured by using appropriate words in the policy to describe the subject matter (which does not necessarily need the mention of the word freight in itself). This is seen in cases such as Flint v FlemyngDevaux v J’ AnsonEches v AldanClark v Ocean Ins Co and The Wondrous. The key to claim freight is in the description of the subject matter specifically as seen in Hall v Jackson, where the court relaxed the previous need for extreme degree of accuracy (Palmer v Pratt).

  1. Insurance On Profits

Insurance on profits is allowed. This was clearly expounded in the case of Barclays v Cousins. Here the Court held that the profits may be insured by valued or unvalued insurance policies. 

  1. Particular Difficulties Relating To Loss Of Profits On Goods

The assured cannot recover the loss of profit on goods unless he proves but for the interference on the perils of the sea which are insured against, some profits would have been realized from the same of such goods. It is also necessary for the goods to be actually exposed to such perils (M’Swiney v Royal Exchange Assurance Co and Halhead v Young).

  1. Profits On Charter And Commissions

Profit of Charter can be insured for by the charterer of a vessel. This is similar to difference of freight and anticipated earnings (The following cases covers each label : Asfar v BlundellSmith & Caramanga v Fenning and Continental Grain Co Inc v Twitchell). Apart from this commissions are also insurable. This is allowed for in Section 3(2) MIA as illustrated in Flint v Le Mesurier and Barclays v Cousins. In the case of commissions, the goods must be proved to be onboard the vessel at the time of the loss (Knox v Wood). Profits and Commissions which are expected to be made must be specifically be named in the policy (Lucena v CraufurdAnderson v Morrice and Mackenzie v Whitworth)

  1. Seamen’s and Master’s Wages And Good Insurable

Seamen were not permitted to insure their wages against the perils of the sea for fear of them not working hard to preserve the vessel against such peril. This changed when section 11 MIA gave the master and the crew and insurable interest for their wages. The personal effects of the master may be insured subject to such items be named in a policy and not covered in the policy of goods (Duff v Mackenzie and Anstey v Ocean Mar Ins Co).

  1. Disbursements

Disbursements must include any form of expenses made for the running of the  vessel which was lost to peril of the sea. When this happens then the disbursement can be recovered(Moran v Uzielli). This can be done as long as there is an insurance for the disbursements taken by the charterer or sub charterer which is usually in the form of a honour policy or payment protection insurance policy for an agreed value. In the modern clauses, the allowance of the disbursement claim allows an additional insurance on disbursements, manager’s commissions’ profits or excess or increased valus of hull and machinery up to 25% of the value stated in the hull policy and further limits the amount that may be insured on freight or hire.

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